In the market for a new home? Thinking about approaching a Long Island mortgage company? If you don’t have pre-approval, it can make or break your experience. Why does pre-approval matter so much? And what does it actually mean when everything’s said and done?
What Is Pre-Approval?
You’ve probably heard this advice before, but pre-approval really does matter. So, what’s it all about? Really, it’s a vote of confidence in your favor. It means that there’s a bank out there that’s provisionally willing to loan you up to $X for the purchase of a home. That carries a lot of weight with realtors and sellers. It’s also a good thing for you, the buyer. How?
Consider the fact that most home buyers start out simply looking at homes and neighborhoods. They’re considering different styles of home, different areas, different school districts, the distance to their job and other things. However, most of them aren’t really looking at the price tag, and they should be. Getting your heart set on a particular home and then finding out weeks down the road that you can’t qualify with a Long Island mortgage company for that amount is heartbreaking. It also means that you have to start the entire process over again from the very beginning.
Pre-approval ensures a different process. It means that you have a firm budget – one that’s not cobbled together on your end. Simply put, you know exactly how much a lender will consider offering you, and you can shop within those limits. It saves time, hassle and headaches.
Another benefit of pre-approval with a Long Island mortgage company is that not only are realtors happier to work with you, but they’re actually better able to lend you their expertise and experience. If you don’t have pre-approval and are simply looking at whatever catches your eye, the realtor doesn’t have the information necessary to narrow down the selection. He or she might show you homes that fit your buying requirements, such as the number of bedrooms, the type of neighborhood or the architecture style, but they lack the most important criteria – how much you can spend.
The Prospect of Derailment
Without pre-approval, you stand a very good chance of encountering disappointment in your search for a new home. We’re not just talking about a Long Island mortgage company not approving you for the amount of the home you want. We’re talking about realtors and sellers completely ignoring your offer because you are not pre-approved. According to Realtor.com, “If you’re not pre-approved and you find a home you want to make an offer on, you’re taking a gamble. Realtors and sellers are less willing to accept offers from a buyer without pre-approval. Odds are, they’ll go on to the next offer – and you’ll miss out.”
Pre-Qualified Is Not Pre-Approved
There’s a lot of confusing jargon in the financial world that a Long Island mortgage company can help you wade through. One of those terms that’s likely to trip you up is “pre-qualified”. It sounds a lot like “pre-approved”, but it’s not the same. Pre-qualification is really little more than getting a broad range of potential loan amounts from a lender. It’s not a firm budget, or even an offer of a loan. Pre-approval means that you have been approved for a specific amount. Pre-qualification doesn’t really mean much of anything.
Something Better Than Pre-Approval
By this point, you should be fully onboard with the concept of getting pre-approved for a loan with a Long Island mortgage company well before you start shopping around for a new home. However, there’s something that might be even better than pre-approval. It’s called “1st Approval”, and it is actually more powerful than pre-approval.
In this scenario, your information is submitted to an actual underwriter, who then approves your loan with some conditions. The most important condition, of course, is the address of the property that you want to purchase. When you find the home of your dreams, the information is updated. It’s a much more streamlined process than pre-approval.
As you can see, there’s a lot more to getting that dream home than just shopping around to find the perfect option. You need the right financial help along the way. Get in touch with Reliant Home Funding to learn more about the 1st Approval process and how it can dramatically increase your chances of getting the home you deserve.
Gregory A. Topal
Gregory is Co-Founder and Licensed Loan Originator at Reliant Home Funding, Inc., a Long Island based Mortgage Company. Gregory currently holds a Mortgage Loan Originator License in NY, NJ, CT, CO, FL and PA and plays an active role in running the company. (NMLS #: 38684)
Gregory was raised in Long Island, NY and attended SUNY Oneonta receiving a Business and Marketing degree in 2004. Shortly after graduating he started a career in Real Estate and has been fortunate enough to advance his career throughout the years. He believes his success can be attributed to consistently striving to exceed the expectations of his clients and colleagues.